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The Litigator
AGM :: Affleck Greene McMurtry LLP

THE LITIGATOR

Affleck Greene McMurtry LLP
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Deterrence main objective behind three year corruption sentence

CFPOA - Canada's Foreign Anti-Bribery Law

How NOT to win business and influence officials

Deterrence and denunciation of bribery of foreign public officials were at the fore as a judge sentenced Ottawa businessman Nazir Karigar to three years in jail for agreeing to offer bribes to public officials in India in order to obtain preferential treatment for a bid to supply to Air India.

Mr. Karigar was convicted in August 2013 under the Corruption of Foreign Public Officials Act () after the first ever trial under this law. The CFPOAmakes it an offence in Canada to bribe foreign government officials. (See Canada’s Foreign Anti-Bribery Law.)

Mr. Karigar is the first individual to have been convicted and sentenced under the CFPOA. His three year jail sentence sends a strong deterrence signal.

In sentencing Mr. Karigar to three years in jail, Ontario Superior Court Justice Hackland relied on three main legal considerations:

  • The CFPOA implements in Canada an international anti-bribery convention that requires state parties to apply similar sanctions to bribery of foreign public officials as they apply to bribery of their own officials.
  • Cases on sentencing for serious fraud and bribery of Canadian government officials establish a range of three to five years as the appropriate sentence.
  • In serious fraud cases, traditional mitigating factors such as past good character do not push the sentence below the range; they help determine where in the range the sentence should fall.

Hackland RSJ identified a number of aggravating factors, including that Mr. Karigar personally conceived of and orchestrated a sophisticated and carefully planned bribery scheme that would have paid millions of dollars in bribes to senior public officials in India. The scheme also involved other dishonest elements, such as entering a fake competitive bid.

There were also a number of mitigating factors, including that Mr. Karigar cooperated with the prosecution (although he pleaded not guilty). Mr. Karigar had no prior criminal record. Finally, the bribery scheme failed; did not get the contract.

Canada has recently been signalling to the business community that it now takes foreign corruption offences seriously. In 2013, the CFPOA was strengthened in six important ways:

  • Nationality jurisdiction: the CFPOA now applies to bribes paid outside of Canada by Canadian citizens, residents, and corporations
  • Books and records offence: it is now an offence to cover up foreign corruption
  • Penalties have been increased to 14 years imprisonment
  • The definition of “business” was broadened
  • The facilitation payments exception will be repealed – eventually
  • The RCMP was given exclusive authority to lay charges under the CFPOA

(For more details on these amendments, see Canada Gets Tough on Foreign Corruption.)

As well, Canada has begun enforcing the CFPOA. Recent enforcement actions include:

  • Griffiths Energy: in 2013, Griffiths was fined $10.3 million for paying $2 million in bribes to Chadian government officials. Griffiths self-reported after a change in ownership of the company. (See Alberta Company Charged with Foreign Corruption.)
  • SNC Lavalin: in 2013, three former SNC employees, including former senior vice president Kevin Wallace, were charged with bribing Bangladeshi officials to win engineering work on a $3 billion bridge project (see Former SNC-Lavalin VP charged in Bangladesh bribery probe).
  • Nikko Resources: in 2011, Nikko was fined $9.5 million for bribing Bangladeshi officials with Range Rovers and trips.

Read: Karigar Sentencing Decision

W. Michael G. Osborne
Affleck Greene McMurtry LLP

W. Michael G. Osborne

Michael Osborne is a former Partner of Affleck Greene McMurtry LLP

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